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Chapter I.—Customs regulations, duties and restrictions (Art. 264 to 270)

Note to X, sec. I

In March 1920 the French Government raised the question with other governments of German violation of these provisions. The “unofficial” representatives of the United States participated in the investigation by the Reparation Commission and the United States passed upon the conclusion through the diplomatic channel of the Embassy at Paris (Foreign Relations, 1920, ii, 273). On June 22, 1920 the president of the Peace Conference sent a letter to the German delegation in the name of the Allied and Associated Powers (United Kingdom, Protocols and Correspondence Between the Supreme Council and the Conference of Ambassadors and the German Government and the German Peace Delegation Between January 10, [Page 547] 1920, and July 17, 1920, Respecting the Execution of the Treaty of Versailles of June 28, 1919 (Misc. No. 15, Cmd. 1325), p. 151). The German commercial regime which was then leading to violations and which subsequently laid the basis for phases of German commercial policy was described as follows:

“The re-establishment by successive ordinances, culminating in that of the 22nd March, 1920, of that absolute control which the German State had instituted for war purposes in 1917 over the imports of the Empire, the establishment of certain monopolies which provide the State with the means not only of regulating purchases abroad, but of proceeding to summary measures of confiscation and taxation of foreign goods already imported into its territory; the system of individual import and export licences, the granting of which is made subject to conditions which are variable, and at any rate impossible of verification, as regards prices, rates, exchange, credits, &c.; the direct or indirect intervention of the ‘Reichskommissar’ of the ‘Preisprüfungstelle’ or local ‘Aussenhandelstellen’, with the object of altering the conditions or suspending the execution of contracts freely accepted, are so many instruments thanks to which Germany is at present in a position to carry on a policy of discrimination, in contradiction with the spirit and the letter of the obligations undertaken by her.”

After recording the practices which had become evident as a result of the investigation, “the Allied and Associated Powers invite the German Government to make the necessary alterations in the commercial regime instituted by it, so as to ensure the following results:

  • “1. Should it be impossible to apply the import or export regulations enacted by Germany without exceptions, it is important that contingents accepted for import or export must not be subjected to arbitrary distribution, nor to individual licences arbitrarily granted.
  • “2. No measures of confiscation or seizure must be applied in virtue of Reich monopolies or any other administrative organisation to goods imported into Germany without a regular licence before the date on which the prohibition referring to them was enacted, or before the expiration of the periods provided for its coming into force.
  • “3. No export duty may be levied unless it has been regularly enacted and published in the journal of the laws of the Reich, and [Page 548]if the German Government makes export charges, these charges, whether stated in marks or converted into foreign currency, must be the same whatever the Allied or Associated country for which the goods are destined.
  • “4. Without prejudice to the conditions referred to in the preceding paragraph, the German authorities shall be forbidden to interfere in any way not directly arising from the rights of the Reich as generally recognised in conformity with the letter and spirit of the present note, in private contracts between German nationals and Allied and Associated nationals; the latter shall be able to claim the execution of contracts altered, suspended or broken as a result of internal intervention on the part of the German authorities as defined in paragraph 4 of the above statements ‘relative to exports’, which states:

    “‘4. That many contracts entered into by nationals of the Allied or Associated Powers have been altered or broken on the direct or indirect initiative of the German authorities, who have interfered to raise prices, to demand surtaxes or premiums, to stipulate for the payment in the currency of the country for which goods are destined or any other foreign country, or to suspend the export according to the exchange fluctuations, and that the breach of the agreements thus broken has in certain cases been to the advantage of purchasers from other countries.’”

The German reply of July 2 (ibid., p. 160; alternative English version, Foreign Relations, 1920, ii, 288) declared that the measures taken or to be taken only aimed “at maintaining the solvency of Germany”, at fulfilling its obligations and not “at placing any of the Allied and Associated Powers at a disadvantage in respect of another or of eluding Articles 264–269 of the treaty”. An exhaustive examination of the whole economic policy was promised with a view to a later statement in greater detail.

The Secretary of State on July 15 authorized the Ambassador in France to inform the Conference of Ambassadors that the United States would “regret extremely any important departure from the practice” of submitting representations to Germany relative to its commercial regime to the United States Government for approval before transmission.

For time limitation see article 280.

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Article 264.

Germany undertakes that goods the produce or manufacture of any one of the Allied or Associated States imported into German territory, from whatsoever place arriving, shall not be subjected to other or higher duties or charges (including internal charges) than those to which the like goods the produce or manufacture of any other such State or of any other foreign country are subject.

Germany will not maintain or impose any prohibition or restriction on the importation into German territory of any goods the produce or manufacture of the territories of any one of the Allied or Associated States, from whatsoever place arriving, which shall not equally extend to the importation of the like goods the produce or manufacture of any other such State or of any other foreign country.

Note to X, 264

The definitive treaty of peace ending the Franco-Prussian war was signed at Frankfurt, May 10, 1871. The German victors inserted a non-reciprocal most-favored-nation clause and subsequently the German Empire had exhibited a predilection for negotiating commercial treaties unduly favorable to itself when opportunity was offered. As a result of French representations and with a view to reconstructing commercial relations on an equalitarian basis, this chapter was included in the treaty of peace.

The note of the Supreme Council dated May 5, 1921 found Germany in default as regarded fulfilment of articles 264–267, and the German Government on May 11 stated its resolve to execute the unfulfilled portions of the treaty.

For the inapplication to Siam of this article and articles 265, 266, and 267 of this chapter, see note under article 137.

Article 265.

Germany further undertakes that, in the matter of the regime applicable on importation, no discrimination against the commerce of any of the Allied and Associated States as compared with any other of the said States or any other foreign country shall be made, even by indirect means, such as customs regulations or procedure, methods of verification or analysis, conditions of payment of duties, tariff classification or interpretation, or the operation of monopolies.

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Article 266.

In all that concerns exportation Germany undertakes that goods, natural products or manufactured articles, exported from German territory to the territories of any one of the Allied or Associated States shall not be subjected to other or higher duties or charges (including internal charges) than those paid on the like goods exported to any other such State or to any other foreign country.

Germany will not maintain or impose any prohibition or restriction on the exportation of any goods sent from her territory to any one of the Allied or Associated States which shall not equally extend to the exportation of the like goods, natural products or manufactured articles, sent to any other such State or to any other foreign country.

Note to X, 266

The Reparation Commission gave an opinion on January 21, 1922 that invoicing in foreign currencies was in no wise prohibited.

Article 267.

Every favour, immunity or privilege in regard to the importation, exportation or transit of goods granted by Germany to any Allied or Associated State or to any other foreign country whatever shall simultaneously and unconditionally, without request and without compensation, be extended to all the Allied and Associated States.

Article 268.

The provisions of Articles 264 to 267 inclusive of this Chapter and of Article 323 of Part XII (Ports, Waterways and Railways) of the present Treaty are subject to the following exceptions:

(a) For a period of five years from the coming into force of the present Treaty, natural or manufactured products which both originate in and come from the territories of Alsace and Lorraine reunited to France shall, on importation into German customs territory, be exempt from all customs duty.

The French Government shall fix each year, by decree communicated to the German Government, the nature and amount of the products which shall enjoy this exemption.

The amount of each product which may be thus sent annually into Germany shall not exceed the average of the amounts sent annually in the years 1911–1913.

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Further, during the period above mentioned the German Government shall allow the free export from Germany, and the free reimportation into Germany, exempt from all customs duties and other charges (including internal charges), of yarns, tissues, and other textile materials or textile products of any kind and in any condition, sent from Germany into the territories of Alsace or Lorraine, to be subjected there to any finishing process, such as bleaching, dyeing, printing, mercerisation, gassing, twisting or dressing.

Note to X, 268 (a)

For special application to Alsace-Lorraine, see article 68.

(b) During a period of three years from the coming into force of the present Treaty natural or manufactured products which both originate in and come from Polish territories which before the war were part of Germany shall, on importation into German customs territory, be exempt from all customs duty.

The Polish Government shall fix each year, by decree communicated to the German Government, the nature and amount of the products which shall enjoy this exemption.

The amount of each product which may be thus sent annually into Germany shall not exceed the average of the amounts sent annually in the years 1911–1913.

Note to X, 268 (b)

The protocol for carrying out this provision until January 10, 1923 was concluded between Germany and Poland at Berlin April 10, 1921 (6 League of Nations Treaty Series, p. 233). A feature of this protocol was a Polish free list which rationed the quantities of principal goods which were exempt from customs duties on importation into Germany.

During the first five years under the treaty of peace a pattern favorable to Polish commercial interests was created. A provisional commercial convention, signed between Germany and Poland on January 13, 1925, was not ratified, though for several years as a modus vivendi it kept in force the conditions of January 11, 1925. The lack of a definite system in commercial relations between the two countries in the succeeding decade was further aggravated by the special relations established in Upper Silesia by the convention of May 15, 1922.

The evolution of German-Polish economic relations after 1925 produced a prolonged tariff war which, in addition to its effect on [Page 552]the political relations of the parties, had repercussions on their relations with neighboring states and incidentally but importantly upon the principal effort of the period to reduce the network of prohibitions and restrictions on imports and exports.

The failure of governments to maintain in force the international convention for the abolition of import and export prohibitions and restrictions signed at Geneva, November 8, 1927 (97 League of Nations Treaty Series, p. 391; U. S. Treaty Series 811), after June 30, 1930 was due to the abstention of Poland, which in turn was due to the lack of a commercial treaty in force between it and Germany.

The fifth session of the Assembly of the League of Nations on September 25, 1924 assigned to the Economic Committee of the League the study of the complex questions of import and export prohibitions and restrictions. The project was forwarded by the International Economic Conference at Geneva in 1927. A diplomatic conference, attended by representatives of 34 states, on November 8, 1927 concluded a convention that succeeded in laying down the general principles for the abolition of import and export prohibitions and restrictions by permitting acceptance of them with extensive but specific exceptions. Solution of the problem required their simultaneous abolition. The prohibition of the importation of German dye stuffs into Great Britain was Germany’s reason for maintaining its prohibition on the import and export of coal, which in turn was the reason given by Czechoslovakia, France, Poland, and other countries to justify the prohibition of the export of metal scrap. The signatories on July 11, 1928 reconvened to complete the convention by a supplementary agreement setting forth the prohibitions and restrictions which they then felt it necessary to retain. Even this list was so extensive that further effort was made to induce states to reduce the number of their exceptions. The convention was to come into force when 18 ratifications had been given, including those of 14 specified states. By the stipulated time, September 30, 1929, ratifications were counted as in hand from 18 states but several of them were contingent upon ratifications by Germany, Czechoslovakia, and Poland. Germany’s deposit of its ratification on November 23, 1929 and Norway’s assent to put the convention in force administratively made it possible to sign a protocol at Paris on December 20, 1929 to bring the convention itself into force on January 1, 1930 provided that those countries [Page 553]which made the convention’s effectiveness “conditional on its ratification by Czechoslovakia and Poland or either of these countries, as the case may be, ratified the convention before May 31, 1930.” On June 30 in any year up to 1934 any state could relieve itself of the obligations if the convention were in force for less than 18 states.

The Polish Government in a note of June 19, 1930 to the Secretary-General of the League of Nations explained its position with respect to the international convention. It had signed the convention of November 8, 1927 as a result of a desire to promote the efficacy of international economic cooperation but did not see its way to submit the convention to the Diet for ratification “until freedom of circulation for articles essential to Polish trade … has been reestablished for the duration of the convention by means of bilateral agreements or in some other way”. The reasons why Poland did not consider it possible to open its markets unrestrictedly to foreign imports were as follows (Department of State, Treaty Information Bulletin, No. 10, p. 13):

  • “II. Poland’s position in regard to international trade is extremely difficult. In particular the situation with regard to exports is such that, as regards manufactured articles, the markets lie to the east of Polish territory, whereas exports of raw materials and agricultural produce find their natural markets in Western Europe. In other words, Poland cannot introduce a system of unrestricted imports unless and until she receives an assurance that her exports will enjoy such conditions as will enable them to develop naturally and unrestrictedly.
  • “III. As a result of the fundamental change in the economic structure of the territories lying to the east of Poland, exports of Polish manufactured articles to those territories have been reduced to very small proportions, and bear no relation to the pre-war volume of exports from Poland to those markets.
  • “IV. In view of the above, Poland is obliged to consider more and more carefully the development of her export trade to western countries. If such conditions could be brought about as would enable her to develop fully and freely her export trade in raw materials and agricultural produce, Poland would have no difficulty in opening her market wider to foreign goods. That export trade is, however, going through a period of serious depression, and the International Convention of November 8th, 1927 makes no real [Page 554]change in the present position, Article 4 making no provision for penalties and Article 6 (and Annex) allowing for exceptions in favor of certain States.
  • “V. The events of the last few months and the result of the conversations between Poland and other States concerned show not only that Poland is unable, as things are at present, to obtain better conditions for her exports of livestock, agricultural produce, and raw materials to western countries, but that, as has lately been observed, conditions are becoming worse every year, and even every month.”

On January 1, 1930 the convention went into force for Great Britain, Belgium, Austria, Luxembourg, Switzerland, the Netherlands, Rumania, Hungary, France, Sweden, Finland, Denmark, Japan, the United States, Italy, Portugal, Yugoslavia (Serb-Croat-Slovene State), Germany, and for Czechoslovakia on June 25.

On March 17, 1930 Germany and Poland signed a commercial treaty. With that treaty signed, the period within which Poland’s ratification was receivable was extended to June 26.

The obligations of the convention were assumed without being conditioned on the ratification of other states only by Great Britain, Sweden, Finland, Denmark, Japan, Norway, the United States, and Portugal. Czechoslovakia’s application of the convention “must depend on its ratification by Poland”. A note in the League of Nations Treaty Series (97, p. 397) says: “The abstention of Poland … caused certain Governments, namely those of Germany, Austria, Belgium, Hungary, Italy, Luxembourg, Rumania and Switzerland, to announce that, as from July 1, 1930, they would cease to consider themselves bound by the convention.” By the terms of the 1929 protocol Denmark, France, and Yugoslavia ceased to be bound as from the same date. The remaining contracting parties ceased to be bound as follows: Portugal, June 30, 1931; Denmark, Norway, the United Kingdom, and the United States, June 30, 1933; Japan and the Netherlands, June 30, 1934.

The date of the German-Polish “tariff war” was determined by the convention on Upper Silesia of May 15, 1922, which in article 224 and by application of article 268 of the treaty of peace accorded Polish products free entry into Germany for three years from the entry of that convention into force, that is, until June 15, 1925. On the other hand, by article 90 of the treaty of peace Poland was prohibited from putting export duties on products destined for Germany for a period of 15 years.

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Despite the provisional convention of January 13, 1925 Germany virtually ceased to consider granting import licenses for Polish coal. Poland by a decree effective June 27, 1925 restricted the importation of commodities originating in countries restricting the entry of Polish goods. Retaliatory measures multiplied. Commercial treaty negotiations were undertaken in November 1925, with the sparse result of agreeing only that a treaty should embrace provisions concerning the treatment of national and corporate persons, trade regulations, conventional duties, and veterinary regulations. Negotiations were attempted in May 1926 and January and March 1927. In July an understanding was reached concerning residence of persons, and on November 30, 1927 a provisional agreement on lumber was signed. After Poland put higher “valorized” duties into effect on March 15, 1928 and simultaneously removed the import restrictions which had existed since 1925, there ensued a tension between Czechoslovakia and Poland and also temporary friction with Austria.

German policy had tended toward conciliatory relations in Europe since the Locarno treaty of 1925 and German admission to the League of Nations in 1926. The years 1928 and 1929 in Europe were marked as a period of growing rapprochement, which found an expression in the annual sessions of the Assembly of the League of Nations. One consequence of this prevailing mood was a lessening of the strain between Germany and Poland and a disposition on the part of both to seek bases for agreement.

The troublesome claims question was settled by the agreement of October 31, 1929 (see note under art. 92) which was enjoined upon both parties by the New (Young) Plan, its paragraph 143 providing for the liquidation of past transactions.

A joint export rye syndicate was established by an agreement between Germany and Poland signed on February 19, 1930.

On March 17, 1930 a commercial treaty on a most-favored-nation basis was signed at Warsaw between Germany and Poland. Its principal provisions were (Commerce Reports, Mar. 31, 1930; Reichsanzeiger, Mar. 24, 1930): “Germany received import contingents on numerous products; Poland received a monthly coal contingent of 320,000 tons and a hog contingent of 200,000 head to be increased later to 350,000 per year. German market prices were guaranteed to Polish animals and animal products under certain conditions. Most-favored-nation and national rights granted by Poland to Germans engaged in business and banking. German steamship lines granted equal privileges as enjoyed by other foreign lines.”

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On April 14, 1930 Germany raised its customs tariff, eliminating many of the benefits which Poland had anticipated. Poland proclaimed new import restrictions of a drastic character and a sharp controversy over Poland’s development of the port of Gdynia added to the tension.

Nevertheless, Poland felt the need of setting its own house in order, not only because its economic relations were stalled by the situation with respect to Germany but also because it was in the position of holding up the effectiveness of the international convention for the abolition of import and export prohibitions and restrictions. General elections in Poland on November 16, 1930 gave the government a majority favorable to ratifying the commercial treaty but an increase in the tariffs on December 7 added to the difficulties with Germany.

The Polish Sejm on March 12, 1931 approved the German-Polish treaty of March 17, 1930 and in the next week approved 27 other instruments of an economic character which had been pending, including the international convention. This action, however, did not cure the German-Polish impasse. The German Reichstag had not approved the commercial treaty, though as a gesture related to the limited entrance into force of the international convention on import and export prohibitions and restrictions, some affirmative notice of it was taken in the Reichstag on March 25, 1930. The East Prussian agrarian interests repeatedly discouraged the German Government from bringing the matter to a head, and no German ratification was given.

A German law of April 4, 1933 concerning the provisional application of bilateral economic agreements with foreign countries (Reichsgesetzblatt, 1933, i, 162) prepared the ground for the National Socialist policy of opening up conventional tariff provisions with a view to introducing the scheme of bilateral clearing arrangements. In May 1933 a détente with Poland occurred, of which the German National Socialist party made much.

Negotiations began in mid-October to end the tariff war and on November 15, 1933 the German Chancellor and the new Polish Minister to Berlin issued a communiqué recording “the complete agreement of both Governments to tackle questions affecting both countries by means of direct negotiations and to renounce any resort to force in their mutual relations” (Poland, Ministry of Foreign Affairs, Official Documents Concerning Polish-German and Polish-Soviet Relations, 1933–39, No. 7; Germany, Auswärtiges Amt, 1939, No. 2, [Page 557]Documents on the Origin of the War, No. 32). On January 26, 1934 Germany and Poland subscribed to a declaration (Reichsgesetzblatt, 1934, ii, 117) in which they mutually stated that for 10 years after the exchange of ratifications (Feb. 24, 1934) “in no circumstances, however, will they resort to force in order to reach a decision in such disputes” as are not settled by agreement in direct negotiations or procedures in agreements in force between them (Germany, Auswärtiges Amt, 1939, No. 2, Documents on the Origin of the War, No. 37).

A Zollfriedensprotokoll (customs truce protocol), signed at Warsaw on March 7, 1934 was intended to do away with the many restrictions and prohibitions which had been put in force by both parties (Reichsgesetzblatt, 1934, ii, 99). It entered into force March 15.

In 10 years of economic conflict the direction of both German and Polish trade had changed and the relations of their economies had altered. A compensation agreement concluded on October 11, 1934 and in force for one year until October 15, 1935 (ibid., p. 829) was a forerunner of an economic treaty on a limited most-favored-nation basis which was signed at Warsaw on November 4, 1935 and entered into effect on November 20 for one year with automatic extension after October 31, 1936 (ibid., 1935, ii, 767). This treaty was supplemented by a clearing agreement of like duration. A fresh treaty signed at Warsaw, February 20, 1937 and in force on March 1 extended the 1935 treaty until February 28, 1939, revised its customs schedules, and included the Free City of Danzig within its scope in virtue of article 104 of the treaty of peace and articles 2 and 6 of the Danzig-Polish convention of November 9, 1920 (ibid., 1937, ii, 1, 91). A revised clearing agreement of even date accompanied the new treaty (ibid., p. 99) and continued to apply the German bilateral clearing of payments through agencies established at the capitals of both countries.

Germany’s annexation of Austria in March 1938 necessitated a new commercial and clearing agreement with Poland which was signed on July 1, 1938 and went into effect on September 1 (ibid., 1938, ii, 562, 650). Following the agreement concluded at Munich on September 29, 1938 Czechoslovakia yielded Teschen to Poland and this change in Polish resources resulted in the conclusion of a supplemental agreement on March 2, 1939 which increased the exchange of goods between Germany and Poland. From March 1939, however, Germany shifted its emphasis in its Polish relations to [Page 558]minorities, “corridor”, and Danzig questions, on all of which it multiplied complaints that became the basis of its casus belli for the invasion of Poland on September 1, 1939.

(c) The Allied and Associated Powers reserve the right to require Germany to accord freedom from customs duty, on importation into German customs territory, to natural products and manufactured articles which both originate in and come from the Grand Duchy of Luxemburg, for a period of five years from the coming into force of the present Treaty.

The nature and amount of the products which shall enjoy the benefits of this regime shall be communicated each year to the German Government.

The amount of each product which may be thus sent annually into Germany shall not exceed the average of the amounts sent annually in the years 1911–1913.

Note to X, 268 (c)

The conditions contemplated by these paragraphs were changed by the conclusion on July 25, 1921 at Brussels of a convention between Belgium and the Grand Duchy of Luxembourg for the establishment of an economic union, which entered into force for a period of 50 years at the exchange of ratifications on March 6, 1922 (9 League of Nations Treaty Series, p. 223). Under article 2 of the convention the territories of the two states are “considered as forming one single territory as regards customs and common excise duties, and the customs boundaries between the two countries shall be abolished”. Commerce between the two countries was to be “entirely free and unrestricted and subject to no import, transit or export limitations or prohibitions nor to duties or charges of any kind”. The Belgian Government at the request of the Grand Ducal Government endeavored to secure the extension to the Grand Duchy of existing commercial treaties and economic agreements between Belgium and other countries, while future instruments were to be concluded by Belgium on behalf of the customs union.

Provision for modification in laws, decrees, and administrative regulations was made by the establishment of the Superior Council of the Belgo-Luxembourg union, which was composed of three appointees of the Belgian Government and two of the Luxembourg Government.

The establishment of the customs union instituted financial arrangements to effect the exchange of temporary notes in circulation [Page 559]as a result of the exchange of marks for Belgian bank notes. To this end the Luxembourg National Bank floated a loan of 175 million francs in Belgium. Article 23 of the convention is a guaranty to Luxembourg that the German marks held by it would receive the same treatment which the Belgian Government secured for the marks held by Belgium. By the agreement signed between Belgium and Germany at Brussels on July 13, 1929 for the settlement of this account, Luxembourg was to receive one thirtieth of the total payable by Germany, which was then given a present value of 320 million marks.

Article 269.

During the first six months after the coming into force of the present Treaty, the duties imposed by Germany on imports from Allied and Associated States shall not be higher than the most favourable duties which were applied to imports into Germany on July 31, 1914.

During a further period of thirty months after the expiration of the first six months, this provision shall continue to be applied exclusively with regard to products which, being comprised in Section A of the First Category of the German Customs Tariff of December 25, 1902, enjoyed at the above-mentioned date (July 31, 1914) rates conventionalised by treaties with the Allied and Associated Powers, with the addition of all kinds of wine and vegetable oils, of artificial silk and of washed or scoured wool, whether or not they were the subject of special conventions before July 31, 1914.

Note to X, 269

The note of the Supreme Council dated May 5, 1921 found Germany in default as regarded fulfilment of article 269, and the German Government on May 11 stated its resolve to execute the unfulfilled portions of the treaty.

Article 270.

The Allied and Associated Powers reserve the right to apply to German territory occupied by their troops a special customs regime as regards imports and exports, in the event of such a measure being necessary in their opinion in order to safeguard the economic interests of the population of these territories.

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Note to X, 270

In virtue of this article a special customs regime in the occupied territories was established on April 8, 1921, and on February 15, 1923 a similar regime was established in connection with the occupation of the Ruhr. See further, page 781.